Big Oil’s Natural Gas Problem Solved…By Bitcoin Miners?
Big oil has a big problem. As a byproduct of oil drilling, oil companies must deal with associated natural gas “byproduct,” often by burning it off. It’s a huge waste of natural resources, but the cost of capturing and transporting natural gas at many drilling sites outweighs the financial benefits.
Conversely, Bitcoin mining requires massive amounts of energy, often secured from the same electricity grid utilized by homes and businesses. Now, it seems Bitcoin miners and oil producers may have solved a double-edged problem. One that reduces natural gas waste and could potentially remove many miners from the utility grid.
Back in February, CNBC reported that ConocoPhillips has begun running a pilot program where “byproduct” natural gas is captured and sold to third-party Bitcoin miners.
The project, located at the oil giant’s Bakken, North Dakota site may soon lead to more “big oil” companies making deals with Bitcoin miners.
This strategy of capitalizing on waste (or stranded gas) not only helps increase revenue and profit at oil companies but may also allow crypto miners to remove their operations from the grid, decrease their local energy consumption footprints, and potentially decrease energy costs, making them more profitable too.
According to a conversation with Cointelegraph, Ethan Vera, CFO of Viridi Funds said “While ConocoPhillips is one of the major energy companies that have publicly announced their entry into Bitcoin mining, there are many other energy companies that have already started the process of setting up mini-test sites.
“If the economics of Bitcoin mining increase and total mining revenue on a USD basis grows, many of the large energy producers will look to enter the space in a bigger way.”
It can be assumed that if “big oil” enters the Bitcoin mining market, it’s likely to initially be done by creating partnerships with existing mining and mine hosting companies.
Mine hosting companies, in particular, could essentially move equipment to drill sites, mine Bitcoin for “big oil” while simply charging hosting and maintenance fees to keep data centers operating efficiently.
This would allow “big oil” to mine Bitcoin using the expertise of mine hosting firms, without the need for hiring crews and experts themselves. Mine hosting companies with fully mobile data centers should be ones to watch.
Read more about Bitcoin’s “Big Oil” solution, HERE